Hundreds of thousands of families will be dragged into the “administrative nightmare” of annual tax forms by the Chancellor’s reform of child benefit.

Budget small print reveals that parents earning more than £50,000 will have to complete “self assessment” forms each year so the Government can calculate how much of the benefit they are entitled to keep.

They face fines of at least £100 from HM Revenue & Customs if they fail to meet the deadline for completing the forms at the end of January.

George Osborne’s rethink of his original proposals were designed to end the £43,000 higher rate tax “cliff-edge” at which parents would no longer be entitled to child benefit.

Under the new version a parent earning more than £50,000 will face a “child benefit tax” to claw back their entitlement up to a maximum of £60,000 when they will effectively get nothing. For every £100 earned over £50,000, tax will go up by the equivalent of one per cent of the child benefit entitlement.

Cormac Marum, head of tax advisory at Harwood Hutton, said: “From January 2013 parents who have never had to fill out a self assessment form will have to do so. This will create an administrative nightmare.”

The Treasury estimates that an extra 500,000 people a year will have to fill in the forms. The new tax charge will affect about 1.2 million families, of which 70 per cent will lose all their child benefit, and 30 per cent will lose a portion. The average loss will be about £1,300 a year. The cost of the extra bureaucracy for the new system is estimated at about £25 million a year.

A spokeswoman for HMRC said: “Filling in the form is going to be relatively straight forward. They will just have to say what their income is and declare their child benefit.” Letters will go out to all parents affected in late autumn.

Shopkeepers today warned that “sin tax” rises could force them out of business. The Budget saw duty on a pack of 20 cigarettes go up 37p while a bottle of wine increased by 11p. Javed Patel, who runs Relish The Newsagent in Pimlico, said: “The Government isn’t doing anything for small corner shops — they just want to see more Tescos opening up.”